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Access to Energy is at the Heart of Development

Story Highlights

A billion people still live without electricity. Hundreds of millions more live with unreliable or expensive power, which poses a key barrier to economic development in emerging economies.

Both grid and off-grid solutions are vital for achieving universal access – but they must be supported by an enabling environment with the right policies, institutions, strategic planning, regulations, and incentives.

The World Bank is committed to helping countries work towards universal access to affordable, reliable and sustainable energy as a key part of delivering on its twin goals of eradicating extreme poverty and promoting shared prosperity. Since 2010, the Bank has provided more than $5 billion for energy access in over 35 countries through some 70 projects.

One billion people – mostly concentrated in Sub-Saharan Africa and South Asia – live their daily lives without electricity. This represents a fundamental barrier to progress for a sizeable proportion of the world’s population, and has impacts on a wide range of development indicators, including health, education, food security, gender equality, livelihoods, and poverty reduction.

The number of people gaining access to electricity has been accelerating since 2010 to around 118 million each year, but these efforts will need to accelerate if the world is going to meet Sustainable Development Goal 7 – ensuring access to affordable, reliable, sustainable and modern energy for all by 2030.

Why is reaching universal access still a challenge?Those remaining without service are either remote, or poor, or both. In urban areas it is poor communities that remain unserved. These should be easy to reach, although the informal settlements where many of these poor reside can be difficult to serve with permanent infrastructure. For remote households, extending the main grid can be prohibitively expensive. Even using off-grid systems to serve these disbursed populations can be financially challenging.

Lack of sufficient power generation capacity, poor transmission and distribution infrastructure, high costs of supply to remote areas, or simply a lack of affordability for electricity, are among the biggest hurdles for extending grid-based electricity.

For off-grid electrification, including mini grids, the biggest challenges are poor policies, inadequate regulations, lack of planning and institutional support, lack of financing for off-grid entrepreneurs, and affordability for poorer households.

Positive stories

A number of countries have made clear progress on expanding electricity access in recent years – and there are common factors among this group. These include sustained political commitment and financing, enabling policies and incentives, strong institutions, and the right balance of grid and off-grid.

Successful countries have also balanced the objective of the financial viability of electricity suppliers with the need to keep consumer prices affordable, for example through strategic and targeted use of public funding. Applying these fundamentals can take different forms, depending on the local conditions.

Bangladesh, for example, has used both privately-delivered off-grid solar home systems and publicly supported extension of the main grid through its rural cooperative program to increase the proportion of the population with electricity from 32% to 62% between 2000 and 2014

Vietnam and Ghana, among other countries, have focused much more heavily on grid extension. China and India have also made excellent progress using a mix of technologies and business models, both on and off-grid.

In Kenya, for example, 700,000 home solar systems were installed on the pay-as-you go purchase model, which is a flexible payment plan that makes electricity accessible to more people. Pay-as-you-go models have become increasingly attractive in many markets, expanding rapidly across Africa. One of the biggest advantages of this system is that people can pay in installments.

The World Bank has a long track record of helping developing countries expand access to affordable, reliable, sustainable and modern energy. It is doing so through supporting grid investments and helping to develop off-grid markets, for example, through programs such as Lighting Global. Since 2010, the Bank has provided more than $5 billion for energy access in over 35 countries through some 70 projects.

Last-mile connections

Last-mile access – getting electricity to people’s homes, local businesses and public facilities – is an important focus for the Bank, especially in Africa and South Asia. Over the last six years the World Bank’s portfolio has included 28 last-mile access projects, 25 of which have included off-grid support.

The Ethiopia Electrification Program - a $375 million IDA credit - will support the Ethiopia’s National Electrification Plan launched in 2017. The Plan will dramatically shift efforts towards last-mile service delivery. It will provide one million last-mile household connections and the initial priority will be access to reliable electricity services for education and health facilities. Only 24% of primary schools and 30% of health centers currently have access to electricity services.

In Bangladesh, the World Bank helped deploy 1.4 million solar home systems. More than 18.5 million people in rural areas now have reliable access to solar-powered electricity.

An important element of the Bank’s strategy is to leverage its efforts with development partners and the private sector by means of financial instruments along with sector and institutional reforms that promote commercial grid and off-grid operations and attract private investment.

In Tanzania, for example, Bank-supported projects have helped create the Rural Electrification Agency and associated Rural Electrification Fund, which are promoting this agenda throughout the country.

Lower costs, increased efficiency

The World Bank also continues to produce ground-breaking research to address energy challenges. For example, a series of Multi-Tier Framework (MTF) surveys is providing new and deeper insights into the level and quality of access through both grid and off-grid systems, as well as in unserved areas.

With innovative solutions and modern technologies available, now is the time to be hopeful about achieving universal access. Plummeting costs for renewable energy and storage technologies, along with increasing efficiency of end use equipment and appliances, offer tremendous opportunity to deliver more service with a lower energy investment.

Additionally, new technology-enabled business models, such as pay-as-you-go solar, offer great opportunities for private sector-driven off-grid electrification, as long as countries can create the right investment environment.